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City Living Comes to Downtown Nashville

The Gulch, in downtown Nashville.

Joe Buglewicz/Wall Street Journal

The capital of country is getting citified.

Nashville’s once-sleepy downtown neighborhoods are in the midst of a transformation: Cranes dotting the skyline are constructing high-rise apartments, condos, hotels and office towers. Tourism has gotten a jolt from a popular eponymous television drama, as well as a new $585 million, 2.1 million-square-foot convention center. And the real-estate market is booming, as young adults and empty-nesters flock to new neighborhoods in search of walkability and proximity to the action.

Perhaps the most dramatic turnaround can be seen in the Gulch, formerly a forgotten industrial area that many locals weren’t familiar with a decade ago. Today, people walk along winding sidewalks with benches and street lamps. There are high-rise and midrise condo and apartment buildings with roof-deck pools and cabanas. Bearded baristas serve artisanal pour-over brews at coffee shops.

The population of downtown Nashville nearly quadrupled to 7,685 between 2000 and 2014, compared with 21{297c5c6b3ea17e3fbdea31491536c8876720203ac47d87d9888529190191d255} growth citywide to about 659,000, according to the Nashville Downtown Partnership. Prices for downtown condos average about $390 a square foot, up from $128 a square foot in 2004, according to the Nashville Downtown Partnership’s Residential Report.

It’s a big shift for this southern city that has long been known for neighborhoods of Colonial homes and early 20th-century bungalows. Before 1994, residential development of any kind was barred in most of downtown.

The local economy is booming, boosted partly by the area’s $30 billion health-care industry. The city’s gross metro product grew 4.2{297c5c6b3ea17e3fbdea31491536c8876720203ac47d87d9888529190191d255} in 2013, double the national average, according to an IHS Global report. It is expected to top $100 billion by the end of this year.

Jennifer Lee, a 37-year-old dermatologist who moved to Nashville in 2010 from Boston, said the city’s new urban landscape made the move easier. She purchased a $356,000, one-bedroom condominium in the Icon, a 424-unit, 22-story building in the Gulch with floor-ceiling windows and an outdoor pool deck. “When we moved in, the building was half empty,” she said. The neighborhood “just exploded in the last year.”

Video: A look at downtown Nashville’s transformation. Credit: Joe Buglewicz for The Wall Street Journal.

Jay Turner, a local developer whose family made its fortune creating Dollar General variety stores, and his partners saw that Nashville had fallen behind in the residential-driven urban revival many other U.S. cities had experienced. So 15 years ago their company, MarketStreet, decided to purchase much of the property and vacant lots around the city’s rail yard.

MarketStreet joined with the city to redo the neighborhood’s infrastructure and streets and christened the area the Gulch, a historic term for the area that had fallen out of use. In 2002, MarketStreet opened the first residential building, a 32-unit apartment complex. It leased quickly, prompting development of more apartments and condos.

The financial crisis stalled development for a few years, but agents say condo sales have bounced back, with resale prices surpassing their precrash highs. That has prompted developers to move forward with projects like Twelve Twelve, a 286-unit building under construction. Prices in the building range from $375,000 for one-bedrooms to about $3 million for three-bedroom penthouses, potentially a record for Nashville.

Twelve Twelve’s developer, Ray Hensler, built his previous condominium, the Adelicia, in Midtown, attracting buyers like Taylor Swift and Kelly Clarkson. Standing in an empty 2,000-square-foot penthouse with wide-plank floors, Mr. Hensler said he has shifted his focus to the Gulch, because it “has emerged as the most sought-after district.”

Residents say there are downsides to living in the Gulch. Rail yards bring loud freight trains through the area a couple of times a day. The streetscape of mostly modern buildings lacks the historic, haphazard charm of cities like New York or Chicago. “It’s been amazing to see the transformation,” said Megan Youngblood. A 35-year-old who works in systems engineering at Vanderbilt University, she moved out of the Gulch to Germantown a few months ago. But “I think the Gulch is trying to figure out what it wants to be when it grows up.”

Although the neighborhood is set up to be walkable, most residents still commute by car. In 2010, the city started a free shuttle-bus service, and bike share was recently added. Karl Dean, the city’s mayor, has backed a plan to build an $18 million pedestrian bridge linking the Gulch to SoBro, financed by developers in the Gulch. “The Gulch is clearly working, but it’s separated [from downtown] by the railroad tracks,” said Mr. Dean. “You gotta connect the dots.” The plan received its final approval from the city council last month. Mr. Turner, the developer, said the addition of offices will also promote pedestrian commuting.

Affordability in Nashville is a growing concern. The city has long attracted artists partly because its housing costs are relatively low when compared with other music and performance hubs like Los Angeles and New York. Mr. Dean said the city is encouraging more developments like Ryman Lofts, a 60-unit affordable apartment complex for artists and musicians just south of downtown in Rolling Mill Hill, another up-and-coming area. Rents there start at $582 a month for studios. MarketStreet said its buildings include affordable units, and the company is actively looking into how to add more in the Gulch.

Real-estate agents and developers said their biggest problem is a lack of high-end inventory and larger units that would appeal to older, wealthier buyers. Most of the Gulch’s apartment and condo complexes are comprised primarily of small one- and two-bedroom units.

Apartment in downtown Nashville

Joe Buglewicz/Wall Street Journal

Charlyn Jarrells, a 50-year-old Arkansas native who retired early from her job as an executive at Wal-Mart , decided to settle in Nashville after living in Seattle, where she lived in a 38th-floor condo. “I loved not having a yard to take care of,” she said.

When she came to Nashville, she wanted a place on a high floor with views, but had a hard time finding anything larger than a one-bedroom. So she purchased two adjacent units in the Gulch’s Icon. She paid about $1 million for both, including a $125,000 credit she could put toward combining them, for a total of about 1,950 square feet of living space. Her unit has wide-plank hardwood floors and views of Ryman Auditorium and the State Capitol from wall-size windows. “I could not be happier with where I’ve landed,” she said.

The hunt is already on for the next Gulch. On a recent afternoon, Mark Deutschmann, a real-estate broker and developer, drove around Wedgewood-Houston, a somewhat sparse industrial and residential neighborhood south of downtown. A few art galleries and studios have appeared, including one in an old hosiery mill, as well as recording studios and distilleries.

He purchased an 8½ acre parcel for $4.5 million, and plans to break ground on a mixed-use condominium development early next year. “It’s really just starting,” he said.

Sony Music Nashville recently announced that it would relocate its offices from Nashville’s Music Row to the Gulch. Developer MarketStreet, which owns much of the property in the neighborhood, said $600 million has been invested in the area so far and another $500 million will be put into residential, retail and office development by MarketStreet and other developers in the coming years

“Ten years ago…you never came here. There was nothing here,” said Scott Evans, a broker with Parks Urban Real Estate Gallery, which opened an office in the Gulch in 2012 with eight agents. It now has 38. Other downtown neighborhoods like SoBro, south of Broadway and home to the Country Music Hall of Fame, and Germantown, just north of downtown, are on the rise as well.

This article was originally published Nov. 6, 2014, on WSJ.com.

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